Yes, a 580 credit score is the key threshold for FHA loans with just 3.5% down payment. This is the most popular option for borrowers in this range. Veterans can access VA loans with zero down payment, and borrowers in eligible rural areas can use USDA loans, also with zero down. NMHL specializes in helping borrowers at this score level find the best program for their situation.

FHA loans are typically the best option for most borrowers with a 580 credit score. They offer the lowest down payment (3.5%), competitive interest rates, and flexible debt-to-income ratios up to 57% in some cases. If you are a veteran, VA loans offer even better terms with zero down payment and no private mortgage insurance. USDA loans are excellent for properties in eligible suburban and rural areas.

Focus on three key areas: (1) Pay all bills on time — payment history is 35% of your score. (2) Reduce credit card utilization below 30%, ideally below 10% — this is 30% of your score. (3) Don't close old accounts and avoid opening new ones. Many borrowers see 20-40 point improvements within 3-6 months with these strategies. Reaching 620 opens up conventional loan options with even better rates.

With a 580 credit score, expect mortgage rates in the 6.5-7.5% range depending on your loan type, down payment, and other financial factors. FHA loans typically offer the most competitive rates at this score level. While higher than rates for excellent credit borrowers, these rates make homeownership accessible now, and you can refinance to a lower rate as your credit improves over time.